Tech City celebrates third anniversary as new figures show economic success story

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The government outlines further plans to back the UK technology sector.

As Tech City marks its third year, the government has welcomed a new report published today (6 December 2013) which highlights the rapid growth of Tech City, from a local initiative created 3 years ago to establishing itself as the digital capital of Europe. Independently produced figures from the report highlight how London tech companies are contributing to economic growth, inward investment and high value jobs across the country.

The government is today (6 December 2013) outlining further action that makes clear that the UK is open for business and is backing our technology sector, by:

Announcing that the government will open up the exceptional talent visa route to world-leading individuals in the digital technology sector. Tech City UK will work with the Home Office in assessing applications for this route, which will open in April 2014. This will provide an immigration route for individuals with a proven track record in developing successful businesses or creating new innovations in the technology sector, allowing our technology industry to attract the best global talent in the world.

Unveiling a new UK digital services index, which will benchmark UK companies — both large and small — listed on the London Stock Exchange and operating in the digital sector. The launch of the index series reflects the growing importance of the digital sector to UK businesses. By widening the definition of what constitutes an internet service business, the new index is more representative of companies operating in the sector with weightings in key service areas such as travel and leisure, media and general retailers as well as traditional software and technology stocks.

Welcoming the fact that from today, Tech City businesses will have access to the fastest mobile network in the world - a 300 megabits per second (Mbps) 4G service built by EE has also committed to prioritising Tech City for all future networking innovations, meaning that businesses in the area will be able to stay one step ahead of their global rivals. As well as delivering a bigger, better, faster mobile infrastructure in the area, EE has launched an experts programme to give Tech City businesses vital experience and mentoring in finance, HR, legal and technology areas.

Welcoming major investments by global technology brands being announced today which will see millions of pounds of investment coming into the country and creating hundreds of high value jobs. These include open source software business Pivotal which is investing £100 million in Tech City over the next 10 years and opening an office on Old Street with 75 people. Samsung Electronics UK, a leader in digital media and convergence technologies, is opening a new Innovation Centre at Fleet Place in London which brings together the design, software, product innovation and mobile product planning parts of the Samsung electronics business. A growing number of employees will be based at the centre and focus on leading innovation in software and design and providing services to the UK and rest of the world.

Announcing a £15.5 million funding package from the government’s Technology Strategy Board to help innovative businesses grow. This includes up to £12.5 million in research and development funding competitions to boost digital and computing technologies across the UK. In addition, at least 3 new competitions of £1 million each to encourage specialist clusters - helping digital companies to develop further into Tech City as well as supporting healthcare technologies in Wales and manufacturing (process industries) in the north east.

Reinforcing government commitments to connect UK technology hubs with plans to enhance and expand transport connections between them. The government is developing proposals for the construction of a new railway linking Bedford to Cambridge and as soon as 2017 new services from Stratford to Stansted and Cambridge. This will link in with the existing transport programmes, including the £14.8 billion Crossrail project, the £6.5 billion Thameslink programme, investments at Reading and Oxford and new station at Cambridge Science Park to create a high tech transport network for a high tech industry. To complement this, the government is prioritising the rollout of on train communication and Network Rail is leading an industry task force to improve 3G and 4G signals through new and enhanced track side.

Tech City Annual Report: findings

The Tech City Annual Report presents data highlighting the role of the digital sector in spearheading London and the UK’s economic recovery. The report states that:

between 2009 and 2012, the number of tech/digital companies in London increased 76%, growing from 49,969 to 88,215

27% of all job growth in London comes from the tech/digital sector, with approximately 582,000 people now employed by the tech/digital sector in London

between 2009 and 2012, the tech/digital sector in London grew by 16.6%

major tech and digital companies have been brought into Tech City in the last 3 years from global markets including the US, Europe and Asia; in recent weeks, US firm Box and social game developer Rekoo have located in London, joining the raft of leading tech companies – among them Facebook, Google, Twitter, Amazon, Cisco, Intel, Microsoft, FourSquare and Pinterest – already based in the capital

Government support for start-ups

In the last 3 years, new government policies and programmes have included the enterprise investment scheme (EIS), seed enterprise investment scheme (SEIS), R&D tax credits, patent box, entrepreneur visa, opening government procurement, the Future Fifty, changes to IPO regulations and the creation of the high growth segment on the London Stock Exchange. These have all acted to catalyse higher rates of start-ups, as well as creating a landscape favourable to digitally enabled firms to scale and grow rapidly.

These changes to the business and policy landscape have caused Tech City to grow from its initial hub in Shoreditch and for tech clusters to emerge and thrive across London. Among them Imperial West, Level39, Croydon Tech City, King’s Cross, Royal Albert Docks, Soho, Silvertown Quays, iCITY and the Olympic Park. As a result, the capital has experienced considerable growth during this period.

In 2010, the government recognised the growth potential of the tech sector and 3 years on, the results are significant. The economic impact generated by creative and innovative digital businesses is not only supporting our recovery, but as today’s new data shows it has ensured our lead as one of the world’s leading digital economies.

Our challenge now is to build on these firm foundations to drive higher rates of start-ups and create a landscape favourable to digitally enabled firms to thrive and contribute long term to growth and jobs.

Further action to boost digital and technology sector

Other action being announced today to boost the digital and technology sector across the UK includes:

Tech City UK has named the second wave of 25 high potential growth businesses to join the Future Fifty – a fast-track programme of public and private sector support to catalyse growth, create jobs and deliver significant economic impact to the UK. The 50 companies, which include brands such as PhotoBox, Matches Fashion and ChemistDirect, are among increasing numbers of scale-ups primed to take advantage the new high growth segment and recent stamp duty reforms on AIM shares.

Imperial College London is announcing a major new data sciences lab to open in 2014. This hub will bring together academics, entrepreneurs and technologists to create the next generation of big data applications and businesses. Data science will be an integral part of the college’s £3 billion vision for Imperial West, the 25 acre research and innovation campus that will stimulate new investment in research, yield economic growth and boost London’s thriving start-up scene. The co-location of research, business and healthcare on this scale will be unprecedented anywhere in the world.

UCL will work with the London Legacy Development Corporation to create a new cluster for higher education on the Olympic Park. The new UCL development will be part of a transformation of east London’s business economy with a focus on arts, culture, design and innovation. These ambitious plans fit with London’s status as a dynamic, young, global city that leads in research, culture and business. Indeed, it has more of the top universities in the world than any other city. UCL’s presence on the park will become a powerful draw for a creative, forward thinking business community, uniquely able to access the resources of the world-class research community to help drive innovation, jobs and growth.

MassChallenge, the world’s largest start-up accelerator and competition, announced plans to launch a programme in London next year. Identified by President Obama as one of America’s best organisations for supporting entrepreneurs, MassChallenge is designed to catalyse the launch and success of high-growth, high-impact new businesses. Combining cash prizes with world-class mentorship and training, free office space, access to funding and media, MassChallenge is open to start-ups from all sectors and does not take equity or place any restrictions on the start-ups it supports. Since 2010, alumni start-ups have raised over $475 million in outside funding and have created nearly 4,000 jobs.